#53: Project Work Agreements

New Hampshire’s recent renewed attempt to enact “right to work” legislation, prohibiting labor unions from charging fees to open shop employees who benefit from union-negotiated collective bargaining agreements, has been much in the news. Not as well publicized, but running on a parallel track, was House Bill 446. Intended to outlaw project-specific labor agreements in state construction contract procurement, the bill proclaimed that “fair and open competition in state construction contracts is necessary to provide for more economical, nondiscriminatory, neutral, and efficient procurement of construction related goods and services by this state and political subdivisions of this state as market participants.” It defined “project labor agreement” as “any pre-hire collective bargaining agreement with one or more labor organizations that establishes the terms and conditions of employment for a specific construction project,” and forbade state contracting officers from either requiring or prohibiting them as a condition of bidding on a state contract.PLAs have been around since the 1930s. They are negotiated by labor organizations, and require all contractors and subcontractors who bid on a construction project – whether they are unionized or open shop – to sign on to the PLA as a condition of working on the project. PLAs typically offer a guarantee to the owner that no work stoppage will occur during the life of the project, in exchange for granting the labor organization the ability to set wages, benefits and employment terms for the job. This results in favoring unionized contractors and requiring nonunionized contractors to hire union workers for the project and pay in to union benefit plans. In practical effect, PLAs require a project to be built solely with union labor, regardless of whether the successful bidder and its subs are otherwise open shop employers. Unions obviously love them. Contractor associations generally hate them. Thus far about twenty states have forbidden their public procurement officials from utilizing PLAs. But New Hampshire will not be among them, at least not this year. On February 15 House Bill 446 was killed in Committee, where the “inexpedient to legislate” vote was 17-2 and the explanation was “This bill is an unnecessary and burdensome new government regulation, which seeks to tie the hands of our state contracting agencies, making it more difficult for the state to get the best deal for our taxpayer dollars. What’s more, this bill is a solution in search of a problem. The bill’s sponsor admitted in testimony that the practice this bill seeks to ban, so-called project labor agreements, have literally never been utilized in New Hampshire and are not planned to be.”It is difficult to argue with an “if it ain’t broke, don’t fix it” rationale (although the notion that PLAs might result in “the best deal for our taxpayer dollars” could spark a chuckle). Unions have not taken root in the Granite State to the same extent that they have in many “blue” states. The focus now shifts to federal contracts, where President Obama’s 2009 Executive Order encouraging the use of PLAs on construction contracts in excess of $25 million will undoubtedly be reviewed by the Trump administration.In a state like ours, where only about 10 percent of the construction work force is unionized, one wonders whether PLAs will scare off bids by local contractors and result in decreased competition. The debate over whether PLAs are likely to yield higher bids will continue to rage, but we do have one basis for comparison right here in New Hampshire. In 2011 the Department of Labor’s Job Corps Center project in Manchester went out to bid with a PLA, and the low bid was $37.87 million. All of the bidders were out-of-state contractors. After a bid protest was filed, the General Accounting Office advised the Department to withdraw the solicitation and re-bid the project without a PLA – which it did. In 2013 the re-bid project drew three times as many bidders, and was awarded to Eckman Construction for $31.63 million – a savings of $6.2 million.Original Article